PureChoice Founder Sentenced To 22 Years In Prison For $28 Million Dollar Investment Fraud Scheme

[nitpicker]

https://www.justice.gov/usao-mn/pr/purechoice-founder-sentenced-22-years-prison-28-million-dollar-investment-fraud-scheme

Department of Justice
U.S. Attorney’s Office
District of Minnesota

FOR IMMEDIATE RELEASE
Wednesday, June 28, 2017

PureChoice Founder Sentenced To 22 Years In Prison For $28 Million Dollar Investment Fraud Scheme

Assistant United States Attorney Gregory G. Brooker today announced the sentencing of BRYAN REICHEL, 62, founder and former President and Chief Executive Officer of PureChoice, Inc. (PureChoice), to 22 years in prison for orchestrating a multi-million-dollar investment fraud scheme. On November 3, 2016, REICHEL, who was charged in a 12-count superseding indictment, was found guilty by a federal jury on 11 of the 12 counts. REICHEL was sentenced earlier today before Judge Wilhelmina M. Wright in U.S. District Court in St. Paul, Minn
(snip)

As proven at trial, beginning in 2003 until 2011, REICHEL solicited investments in PureChoice by falsely representing to investors that the money would be used to fund the operations of PureChoice, a Burnsville-based company that sold air quality monitors. As part of the scheme, REICHEL stole millions of dollars from investors by lying about the success of the company and concealing the fact that PureChoice faced defaulted debt that it had no ability to pay.

For example, as proven at trial, in October 2004, REICHEL solicited a $500,000 loan to PureChoice from Victim PH purportedly to fund PureChoice operations until the completion of a private stock offering in early 2005. Rather than using the money to fund PureChoice operations, REICHEL used Victim PH’s funds to pay defaulted PureChoice debt, which REICHEL had personally guaranteed.

As proven at trial, in September 2005, REICHEL solicited a short-term $500,000 “bridge loan” from Victim RB to PureChoice by falsely representing that the money would be used to fund operations until the company received additional financing and investments. Immediately after receiving the loan, REICHEL paid $70,000 to himself and made more than $200,000 in payments toward earlier unpaid loans. In March 2006, REICHEL again asked Victim RB to provide money to fund PureChoice operations, this time in the form of a $3 million line of credit which PureChoice could access through a series of $500,000 loans. Several times between 2006 and 2009, REICHEL several times requested Victim RB to increase the amount, ultimately obtaining more than $5 million in loans for PureChoice from Victim RB. REICHEL used a significant portion of the money to pay off earlier investors, make interest payments to Victim RB, and to make preferential payments to himself.

As proven at trial, between April 2007 and August 2007, REICHEL sold Victim GA $900,000 worth of PureChoice stock, falsely representing that the funds would be used to purchase manufacturing components and to pay for operational expenses. Instead, REICHEL used the funds to purchase stock in other companies and pay personal credit card debt. In May 2008 and July 2008, REICHEL asked Victim GA to provide PureChoice with loans in the amount of $800,000 and $200,000, respectively, stating that the funds were needed to “bridge the gap” until the next round of funding was complete. Again, REICHEL used the majority of the funds for personal use, including the purchase of stock in other companies and paying off thousands of dollars in credit card debt.

As proven at trial, on November 14, 2008, REICHEL sent a sales and marketing update to PureChoice investors and prospective investors in which he made false statements about the company’s corporate agreement with 3M. In the update, REICHEL stated that PureChoice was “currently working to expand [its] existing relationship” with 3M, when, in reality, REICHEL had received notice from 3M of its intent to allow its agreements with PureChoice to expire.

As proven at trial, in September 2009, REICHEL asked Victim GA and Victim DA to provide a $1.5 million loan to PureChoice to purchase manufacturing materials so the company could meet projected sales goals and hire additional staff. In order to secure the loan, REICHEL again misrepresented the company’s relationship with 3M and expressly stated that the funds would be used to purchase products from suppliers. Over the course of four transactions, REICHEL obtained a $1.5 million loan from Victim GA, of which a significant portion was used to pay off earlier investors in PureChoice and to transfer more than $600,000 to himself.

As proven at trial, by June 2010, several of REICHEL’s victims had demanded immediate payment of millions of dollars they had “invested”. To avoid repayment and protect his assets, in April 2011, REICHEL filed for bankruptcy in the District of Minnesota, giving rise to an automatic stay and thereby preventing lawsuits and judgments from being entered by the victims. As part of the scheme, REICHEL made false statements in his bankruptcy case in order to conceal numerous items of personal property and thousands of dollars in personal accounts.
(snip)

[TexasTowelie]

1. This sounds like an upstanding citizen practicing Trumpian economic lessons:

The Art of the Swindle.

22 years doesn't seem like enough for all of the damage he has done.